Entrepreneurs—Breakthrough Innovators

Entrepreneurs

• Recognize opportunities where others see chaos, contradiction, or confusion

• Are aggressive catalysts for change within the marketplace
• Challenge the unknown and continuously create breakthroughs for the future

Small Businesses Owners - Manage their businesses by expecting stable sales, profits, and growth

Entrepreneurs - Focus their efforts on innovation, profitability and sustainable growth

Entrepreneurship is more than the mere creation of business:

• Seeking opportunities
• Taking risks beyond security
• Having the tenacity to push an idea through to reality

Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner.

Entrepreneur is derived from the French entreprendre, meaning “to undertake.”

• The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business.
• Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneurs,
research is providing an increasingly sharper focus on the subject.

Entrepreneurship (Robert C. Ronstadt)

• The dynamic process of creating incremental wealth. This wealth is created by individuals who assume major
risks in terms of equity, time, and/or career commitment of providing value for a product or service.
• The product or service itself may or may not be new or Unique but the entrepreneur must somehow infuse
value by securing and allocating the necessary skills and resources.

Entrepreneurship (An Integrated Definition)

• A dynamic process of vision, change, and creation.

• Requires an application of energy and passion towards the creation and implementation of new ideas and
creative solutions.

Essential ingredients include:

• The willingness to take calculated risks—in terms of time, equity, or career.

• The ability to formulate an effective venture team; the creative skill to marshal needed resources.
• The fundamental skills of building a solid business plan.
• The vision to recognize opportunity where others see chaos, contradiction, and confusion.

The Myths of Entrepreneurship

• Myth 1: Entrepreneurs Are Doers, Not Thinkers

• Myth 2: Entrepreneurs Are Born, Not Made
• Myth 3: Entrepreneurs Are Always Inventors
• Myth 4: Entrepreneurs Are Academic and Social Misfits
• Myth 5: Entrepreneurs Must Fit the Profile
• Myth 6: All Entrepreneurs Need Is Money
• Myth 7: All Entrepreneurs Need Is Luck
• Myth 8: Entrepreneurship Is Unstructured and Chaotic
• Myth 9: Most Entrepreneurial Initiatives Fail
 • Myth 10: Entrepreneurs Are Extreme Risk Takers

Types of people involved with contemporary small businesses:

• The entrepreneur who invents a business that works without him or her.
• The manager who produces results through employees by developing and implementing effective systems and,
by interacting with employees, enhances their self-esteem and ability to produce good results.
• The technician who performs specific tasks according to systems and standards management developed.

The Environmental School of Thought - Considers the external factors that affect a potential entrepreneur’s lifestyle.

The Financial/Capital School of Thought - Based on the capital-seeking process—the search for seed and growth capital.

The Displacement School of Thought - Alienation drives entrepreneurial pursuits

• Political displacement (laws, policies, and regulations)

• Cultural displacement (preclusion of social groups)

• Economic displacement (economic variations)

The Entrepreneurial Trait School of Thought - Focuses on identifying traits common to successful entrepreneurs.

• Achievement, creativity, determination, and technical knowledge

The Venture Opportunity School of Thought - Focuses on the opportunity aspect of venture development—the search
for idea sources, the development of concepts, and the implementation of venture opportunities.

• Corridor principle: New pathways or opportunities will arise that lead entrepreneurs in different directions.

The Strategic Formulation School of Thought - Emphasizes the planning process in successful venture development.

Strategic formulation is a leveraging of unique elements:

• Unique Markets—mountain gap strategies

• Unique People—great chef strategies

• Unique Products—better widget strategies

• Unique Resources—water well strategies

Process Approaches to Entrepreneurship

An Integrative Approach - Built around the concepts of input to the entrepreneurial process and outcomes from the
entrepreneurial process. Focuses on the entrepreneurial process itself and identifies five key elements that contribute to
the process. Provides a comprehensive picture regarding the nature of entrepreneurship that can be applied at different
levels.

Dynamic States Approach - Stresses dependency of venture on environment and the interaction of:

• The dominant logic of the firm

• The business model
• Value creation

A Framework of Frameworks Approach - Offers a more dynamic view of entrepreneurship. Allows for the profession to
move forward. Identifies the static and dynamic elements of new theories, typologies, or frameworks of importance.
The Entrepreneurial Revolution: A Global Phenomenon

• Entrepreneurship is the symbol of business tenacity and achievement.

• Entrepreneurs were the pioneers of today’s business successes.
• Two perspectives on entrepreneurship: Statistical: numbers that emphasize the importance of entrepreneurs to
the economy. Academic: trends in entrepreneurial research and education.

The Global Entrepreneurship Monitor (GEM) Provides an annual assessment of the entrepreneurial environment of
over 100 countries. Latest GEM study: the U.S. outranks the rest of the world in important entrepreneurial support.

• Entrepreneurs lead to growth by: Entering and expanding existing markets. Creating entirely new markets by
offering innovative products. Increasing diversity and fostering minority participation in the economy.

Phases of Economic Development

• The factor-driven phase

• The efficiency-driven phase
• The innovation-driven phase

Lessons from the GEM Study

• Impacts economic measures for growth, innovation, and internationalization.

• Needs both dynamism and stability for the creation of new businesses and the exit of nonviable ones
• Requires a variety of business phases and types and different types of entrepreneurs including women and age
groups
• Works best when there is a strong set of basic economic requirements in place to reinforce efficiency enhancers
• Flourishes when there is broad societal acceptance of the entrepreneurial mind-set.

Entrepreneurial Activity in the United States:

Growth in Small Businesses - Entrepreneurs create over 400,000 new businesses each year.

• 28.2 million small firms provide 49.6 % of private sector jobs and make up 99.7 % of employing firms.
• Over the past five years, the number of minority owned firms increased 45.6% while women-owned businesses
increased 20.1%. 1 of every 150 adults participates in the founding of a new firm each year.

Reasons for the exceptional entrepreneurial activity in the U.S. include:

• A national culture that supports risk taking and seeking opportunities.

• Americans’ alertness to unexploited economic opportunity and a low fear of failure.
• U.S. leadership in entrepreneurship education at both the undergraduate and graduate level
• A high percentage of individuals with professional, technological or business degrees who are likely to become
entrepreneurs.

“Gazelle” - A business establishment with at least 20% sales growth in each year for five years, starting with a base of at
least $100,000 in annual sales.

• Gazelles as leaders in innovation: Are responsible for 55% of innovations in 362 different industries and 95% of
radical innovations. Produce twice as many product innovations per employee as do larger firms. Obtain more
patents per sales dollar than do larger firms.

Mythology Associated with Gazelles

• Gazelles are the goal of all entrepreneurs.

• Gazelles receive venture capital.
• Gazelles were never mice.
 • Gazelles are high-tech.
• Gazelles are global.

How many gazelles survive? The simple answer is “none.” Sooner or later, all companies wither and die.

The Common Myth of Failure: 85% of all firms fail in the first year—in actuality, about half of all start-ups last between 5
and 7 years.

Entrepreneurial components of the U.S. Economy:

1. Large firms have increased profitability by returning to their “core competencies through restructuring and
downsizing.

2. New entrepreneurial companies have been blossoming in new technologies and new markets.

3. Thousands of smaller firms established by women, minorities, and immigrants have strengthened the economy.

Major Research Themes:

1. Venture Financing: venture capital and angel capital financing and other financing techniques strengthened in the
1990s.

2. Corporate Entrepreneurship and the need for entrepreneurial cultures has drawn increased attention.

3. Social Entrepreneurship has unprecedented strength within the new generation of entrepreneurs.

4. Entrepreneurial Cognition is providing new insights into the psychological aspects of the entrepreneurial process.

5. Women and Minority Entrepreneurs appear to face obstacles and difficulties different from those that other
entrepreneurs face.

6. The Global Entrepreneurial Movement is increasing.

7. Family Businesses have become a stronger focus of research.

8. Entrepreneurial Education has become one of the hottest topics in business and engineering schools throughout the
world.

Entrepreneurship A process of innovation and new-venture creation through four major dimensions—individual,
organizational, environmental, and process—that is aided by collaborative networks in government, education, and
institutions.

Entrepreneur A catalyst for economic change who uses purposeful searching, careful planning, and sound judgment
when carrying out the entrepreneurial process.

Entrepreneurial Discipline - It matters not who or what the entrepreneur is—a business or a non-business public service
organization, whether a governmental or non-governmental institution. The rules are much the same and so are the
kinds of innovation and where to look for them.

Entrepreneurial Leadership Combining two capacities of the pursuit of innovation. One of the most significant phrases
in the twenty-first century.

• Capacity to lead • Capacity to risk

Leadership is measured.

• Sense of opportunity • Drive to innovate. • Capacity for accomplishment